Georgia’s hidden money machine: Car-wreck lawsuits

What better place to see a giant picture of a lawyer than Interstate 75 in Atlanta? It’s one of America’s busiest roads, and if a driver has been side-swiped or rear-ended and is waiting for a tow truck, they’ll inevitably stop staring at the damage to their car and look up in frustration.

But despite promises written in large letters on interstate billboards made by lawyers who will fight “for the people,” as the firm that spends the most money on these ads in the nation puts it, other plaintiff lawyers caution against hiring the face looking down on drivers stranded on the side of the road.

“You should avoid hiring a billboard attorney because these firms often focus on handling as many cases as possible rather than providing personalized, high-quality representation,” injury lawyer Jay Kennamer wrote on his firm’s website.

“They may rush to settle cases for lower amounts just to keep their business moving.”

That quantity-over-quality approach is also attractive to doctors and funders who are now in the middle of a series of court fights in Georgia. Insurers, annoyed by what they say is a scheme to inflate wreck-victim’s medical bills to drive up settlements and verdicts, have obtained orders requiring lawyers, doctors and funders to disclose how they approach these cases.

As described in part one of this series, those orders often lead to the outright dismissal of the plaintiff’s case or a quick settlement, meaning that, usually, insurers never get to disclose what they’ve learned, if anything, in court documents.

It’s not hard to see why law firms and their favorite doctors and funders fight to keep these agreements secret. In one case, lawyers for a trucking company’s insurers forced funder Omni Healthcare to turn over contracts with Georgia medical clinics that got a lot of referrals from personal-injury lawyers. Insurers seek these contracts because treating physicians are usually the causation experts needed by plaintiffs to prove they were injured in an accident. If the insurer can prove a doctor has a financial interest in the case, they can be undermined in cross-examination or excluded altogether.

One case might not be worth all that much to a funder and can be cast aside if there’s too much heat. But what about the entire portfolio? When Omni was sold to Libra Solutions, owned by $13 billion private equity firm Parthenon Capital, the purchase price wasn’t made public.

However, the scale of the transaction can be judged by the fact Libra issued $500 million in notes around the same time as it bought Omni, with “plaintiff and medical lien receivables” as collateral. On its website, Libra boasts of relationships with more than 75,000 personal injury attorneys and more than $3 billion in lawsuit-backed loans so far.

Libra and Omni are just two players in the fast-growing business of funding other peoples’ lawsuits by purchasing the medical bills plaintiffs rack up. Omni’s contracts show it agrees to buy receivables – bills backed by a lien on the plaintiff’s lawsuit proceeds – at a discount as long as clinic doctors cooperate. A doctor has to pay Omni back if he or she “fails to testify” or “hinders collection of the bill,” and Omni gets to shave an additional 20% off what it pays for future receivables if the doctor violates the lender’s rules.

In Georgia, there’s always the possibility of a 10-figure verdict. Just ask Ford Motor Company, which has watched as jurors returned awards of $1.7 billion and $2.5 billion in recent years. And the money flowing from lenders like Omni fuels the entire tort-lawsuit machine, helping to pay for the billboards that line every major highway. Lawyers spent at least $35 million on out-of-home advertising in Atlanta last year, according to research from MediaRadar. Three personal-injury firms each spent more than $3 million.

OOH advertising across the nation reached a record $9.46 billion last year, and that spending has increased in 19 straight quarters. Lawyers spend more than any other industry, and health care is second.

“If you see a billboard with a lawyer -- particularly if you see a billboard with a doctor -- it’s happening,” said Joe Kessing, a consultant who spent decades managing personal-injury settlements for a large insurance company.

“In bulk at a significant discount”

Lawsuits by insurers and others in Pennsylvania, New York and elsewhere seek to disrupt the tight three-way relationship among doctors, lawyers and funders, claiming a nationwide pattern of inflated medical bills hidden behind secret funding agreements.

Most funders are private, but publicly available financial information shows investing in lawsuits can be extremely lucrative. Plaintiffs sign agreements under which a doctor provides care at no cost up front, but lenders pocket the difference between what they paid to the doctor for a lien and the larger bill presented in court.

Tecumseh Alternatives, a North Carolina hedge fund, operates a couple of funds backed by plaintiff medical liens. A pitch for one of those funds touts the multibillion-dollar market for medical imaging alone.

The funder “purchases from imaging providers, in bulk at a significant discount,” Tecumseh explained. Financial reports show one Tecumsah fund has earned $3.5 million gross profit so far on $10.3 million in collections while another fund has made $1.5 million on $4.1 million collected, both well above 30%. The profit on individual claims can exceed 800%, representing the difference between what the funder paid a doctor for medical services and what the plaintiff said it cost in court.

A lawsuit against Omni in Maryland included bills suggesting an accident victim’s CAT scan bill ballooned from $350 to $1,695 after the lender got its hands on it. That case was dismissed after Omni cited an arbitration clause in the plaintiff’s lien agreement.

A Forsyth County case shows there is no exact cost of medical care for these car-wreck victims. Omni claimed $4,450 in “unpaid medical expenses,” but when the case settled for $100,000 and the plaintiff couldn’t be located, Omni was willing to accept just $1,800 to be satisfied.

That plaintiff, believed to be residing in Puerto Rico, had accepted the policy maximum to settle his case, even though lawyers presented $78,000 in medical expenses and were working on a contingency fee valued at $35,000. That would’ve left the plaintiff owing money, but the medical bills were reduced through negotiations by $50,000. The plaintiff would pocket 36% of the settlement under the proposal submitted to the court.

“The growing role of third‑party litigation financing in medical claims is deeply concerning - especially when there are allegations of fraud or abuse, said Stef Zielezieski, the chief legal officer at the American Property Casualty Insurance Association.

“When financial backers are tied to medical decisions or lawsuits, it can create incentives to extend disputes, increase treatment or undergo unneeded procedures, inflate costs, and siphon an increasing percentage of any award away from injured patients.”

Georgia lawmakers were informed in December by Dr. Robert Hoyt, a longtime professor and chair of insurance at the University of Georgia’s Terry College of Business, that the state ranked at the bottom of insurance profits in 2024.

Insurers lost nearly 9% in the state that year. The rest of the country produced returns of 7.8%, he reported. And that discrepancy will drive insurers out of the state, he said, which will let the holdout companies increase premiums for Georgians due to a lack of competition.

Asked whether higher medical costs impact the amounts of settlements and verdicts, he said “medical costs typically in litigated claims kind of form that benchmark for then, how much might be the non-economic damage of pain and suffering and some of those things.”

For well more than a century, U.S. courts have enforced the “collateral source rule,” preventing juries from reducing a plaintiff’s damages to reflect payments they received from insurance or charity. It was designed to prevent defendants from avoiding paying the full cost of injuries they caused.

Plaintiff lawyers have weaponized the rule in more recent years, insurers complain. By disguising the amount doctors are actually paid through secret agreements with third-party funders, they can inflate every minor accident into a payout at the policy limits of insurance – just as long as the judge doesn’t allow the real numbers to enter the court record.

“The result is higher costs that ripple through the system and show up as higher insurance premiums, medical bills, and everyday prices for everyone,” Zielezieski said. “That’s not effective justice, good consumer protection, and it’s certainly does not help address persistent affordability challenges. Common‑sense reforms can help realign the system with its core purpose—fairness and patient care.”